Opinion: Ethereum (ETH) Is Coiling Like a Spring in Order to Hit $9K

Opinion: Ethereum (ETH) Is Coiling Like a Spring in Order to Hit $9K

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From time to time cryptocurrency market analysts are using the image of a coiled spring to characterize some coins. ETH is considered to consolidate now before the update named London scheduled for July 14th.

Decentralized finance (DeFi) and NFT became the drivers of growth for ETH in 2021. There were popular non-fungible tokens, NFTs, launched on Ethereum, that pushed ETH towards highs in mid-May. On May 12, the leading altcoin hit its all-time high at $4,362, according to Coinmarketcap. Now ETH is down almost 40%, but analysts are confident that this is just a correction before a new wave of growth.

For ETH to skyrocket, there are at least two fundamental factors: the London update, which will finally resolve the issue of high fees in the Ethereum network, and the tightening of tax policy in the United States. Against the backdrop of higher taxes and the barriers to the withdrawal of capital offshore, we can expect the development of a number of new DeFi projects that will offer investors to circumvent the restrictions. New DeFi projects will certainly push ETH to rise. This is all the more likely after the London update happens and fees will decrease due to a decrease in remuneration for miners.

As a result of the EIP 1559 update (EIP – Ethereum Improvement Proposal, Ethereum improvement proposal), the issue of choosing a fair fee for the transaction is being resolved. The fee for including a transaction in a block will be sent not to miners, but into the network. Miners are losing income, they have expressed their dissatisfaction and threatened to carry out a “51% attack”. But the chance of such an attack is assessed as negligible. In addition, practice shows that even a 51% attack does not affect the price of a cryptocurrency. There have already been three attacks on the hard fork Ethereum Classic, but its price has not dropped significantly.

The London update will also strengthen Ethereum’s position in a competitive environment. In 2020-2021 due to the growth of fees, developers of DeFi projects tried to migrate to other networks, such as TRON (TRX), Binance Smart Chain (BNB), Solana (SOL). This has provoked a fast rise in their cryptocurrencies. The BNB cryptocurrency, for example, entered the TOP-3, and experts began to call Binance Smart Chain the Ethereum killer.

However, after resolving the issue of fees in the ETH network, the chances of competitors are greatly reduced. Currently, none of the competitive projects can take the place of Ethereum. It is an easy-to-use and powerful platform for creating new projects, many developers successfully work with it. None of ETH’s competitors can attract a comparable number of developers to launch their own DeFi projects. From the point of view of the cryptocurrency market, this means that ETH will rise rapidly, while the rise of BNB, TRX, and SOL will slow down.

The optimistic forecast for ETH is the price of $8000-9000 by the end of 2021. The pessimistic forecast also looks optimistic: Ethereum will not fall below $2200-2500 until the end of the year.